1Bern, September 27th, 2010

IEG INDEPENDENT EVALUATION GROUP World

BankBudget Support toIDA CountriesAnjali KumarIndependent Evaluation Group, World Bank

Presentation to the Swiss Development Corporation

PRSCs reflected the Bank’s response to shift s in the aid paradigm

2

Anchored in country-owned development strategies

Implementation through country systems

Responsible fiduciary environments

Explicit poverty-oriented growth

Pro-poor service delivery

From 2001-09, 99 PRSC operations were approved

FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY080

5

10

15

20

25

24

8

13

20 2018

19

2 2

7

10

17

15

19

15

3

…worth $8 billion, in 27 countries

Countries with ongoing PRSCs

New PRSCs approved

From 2001 to September 2009, 99 PRSC operations were approved

20 more operations ($1.7billion) under preparation (for FY10)

One-fourth of Bank policy lending but 30-40% of disbursements to PRSC countries

But PRSC share of country budgets is declining (7 % in 2001; 1.5% in 2008)

Introduced under Interim Guidelines in 2001

…PRSCs were not a separate instrument after 2004, but the PRSC label retains many distinguishing features:

► Built around credible poverty reduction strategies

► Broad-based programmatic support

► For better-performing IDA countries

► Oriented toward poverty-reducing growth

4

1. PRSCs improved aid processes

Enhanced country ownership

Eased conditionalityBetter predictabilityMore pro-poor service

delivery2. Growth and poverty

outcomes are unclear Weak Results frameworksPartial Support to Sectors

3. Other Policy Based Lending converged to a similar design

5

Three Key Findings

Inputs

• Predictable medium term resources

• Aligned with country needs

Outputs

• Implementation of PRSP• Improved accountability• Enhanced donor

harmonization

Outcomes

• Effective public administration

• Improved climate for growth• Better pro-poor service

delivery

Impact• Sustained growth• Reduction of poverty

Evaluation Results Chain

6

PRSCs improved the

aid process

7

PRSCs were expected to ease aid processes

8

• Eased conditionality

• Increased flexibility

• Greater predictability in volume and frequency

• Better alignment with client budget cycles

• Improved vehicle for donor harmonization

Eased conditionality -

9

…conditionality declined in all policy lending

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

0

10

20

30

40

50

Conditions in Bank adjustment loans, FY1980 -- FY2008

Ave

rage

# o

f con

ditio

ns p

er o

pera

tion

28 383336303842 3228 23483629292727 323032322931 23161699 144

2 1916171072 15

PRSC legal conditions

Non-PRSC legal conditions

Eased conditionality -

10

…conditionality declined in all policy lending

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

0

10

20

30

40

50

Ave

rage

# o

f con

ditio

ns p

er o

pera

tion

Conditions in Bank Adjustment loans, FY1980 -- FY2008

28 383336303842 3228 23483629292727 323032322931 23161699 144

2 1916171072 15

PRSC program benchmarks

Non-PRSC program benchmarks

More flexibility in interpreting conditionality…

PRSCs introduced ‘triggers’ -- indicative prior actions in place of legally binding tranche release conditions

Triggers between FY01 and FY08:• 59% met• 15% downgraded• 9% amended• 8% dropped• 9% replaced/postponed

Sometimes new prior actions were included

11

More lending for social services and public sector management…

12as did other DPLs

Education

Finance

Health

Ind. & Trade

Public sector

0% 10% 20% 30% 40% 50% 60% 70%

non-PRSC PBL (IDA) FY95-00 - 92 projects

Education

Finance

Health

Ind. & Trade

Public sector

0% 10% 20% 30% 40% 50% 60% 70%

PRSC (01-08) 87 Operations

Education

Finance

Health

Ind. & Trade

Public sector

0% 10% 20% 30% 40% 50% 60% 70%

non-PRSC PBL (IDA) FY05-08 - 57 projects

More predictable resources …

Burkina Faso is a good example…

13

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

0

10000000

20000000

30000000

40000000

50000000

60000000

70000000

80000000

90000000

100000000

Q4

Q3

Q2

Q1

PRSC 1

PRSC 2

PRSC 3

PRSC 4

PRSC 7

PRSC 6

PRSC 5

PRSC 1

PRSC 2

PRSC 3

PRSC 4

PRSC 7

PRSC 6

PRSC 5

PRSC 1

PRSC 2

PRSC 3

PRSC 4

PRSC 7

PRSC 6

PRSC 5

PRSC 1

PRSC 2

PRSC 3

PRSC 4

PRSC 7

PRSC 6

PRSC 5

PRSC 1

PRSC 2

PRSC 3

PRSC 4

PRSC 7

PRSC 6

PRSC 5

PRSC 1

PRSC 2

PRSC 3

PRSC 4

PRSC 7

PRSC 6

PRSC 5

PRSC 1

PRSC 2

PRSC 3

PRSC 4

PRSC 7

PRSC 6

PRSC 5

PRSC 1

PRSC 2

PRSC 3

PRSC 4

PRSC 7

PRSC 6

PRSC 5

A steady volume of disbursements, in the same quarter per series…

Budget support through PRSCs complemented sector lending…

14

…Replacement was rare

Many tried to channel sector lending through the PRSC:

• Of 15 CASs in health and education, only 2 achieved sustained results

• Of 6 CASs in nutrition, water supply, agriculture or environmental management, 1 on a sustained basis

Weak but improving results frameworks

Need for:Clearly defined indicatorsBaseline data Consistent over timeIntermediate milestones

Shortcomings due to:Weak upstream PRSPs/ CASs Multi-donor process differencesModest M&E frameworks, often reflecting weak country statistical capacity

15

PRSCs improved donor harmonization

16

Sometimes as a focal point for donors

Often as member of a multi-donor group

Harmonized common donor matrices and alignment with the national plans

Reduced transaction costs for recipients

Provided Bank expertise to recipients and other donors

Bank harmonized more missions than other donors in PRSC as well as non-PRSC countries, especially weaker IDA countries

Donor harmonization challenges remain

Limited integration of PRS reviews with the joint matrix (PAF)

Initial perception of increased conditionality

Increased transaction costs for Bank (e.g. Mozambique, Ghana)

Some loss in Bank relevance alongside undue influence of small donors

17

PRSC Outcomes –

Public Financial Management

Easier objectives accomplished

18

Most PRSCs achieved their PFMP reform objectives, with minor shortcomings

Reforms well grounded in diagnostics led to well sequenced strategy agreed with donors

Program achievements were in easier areas (e.g., budget classification reform)

More difficult reforms show less success (e.g.bringing extra-budgetary funds and donor funds on budget; timely resource transfer to sector ministries)

19

PRSC Outcomes in Growth and Poverty Alleviation…

are difficult to establish

20

  1985-1999 2000-2007

Per Capita GDP growth

PRSC countries 0.8 4.2

Better Performing Non-PRSC 0.5 3.3

All IDA countries 0.2 3.0

21

Attribution to the PRSC is difficult

PRSC countries grew faster in the PRSC period…but so did other

countries

Poverty Rates for PRSC and Non-PRSC Countries (% of population below $38 per month)

PRSC countries

(20)

Better performing non-PRSC

(24)*

Non-PRSC counties

(36)

All IDA countries

(56)

% change (1984-99) -16.2 -12.6 -2.1 -7.8

% change (1999-2005)

-19.3 -13.0 -10.8 -14.1

but the decline began before the PRSC was introduced

PRSC countries had more income poverty reduction…

22

PRSC Countries had greater progress with Millennium Development Goals…

PRSC and Other Countries: Millennium Development Goal Achievement

Difference (%)(% of population) (1990/1–2000/1) (2001–06)Primary enrollment, net PRSC 9.7 14.8 All IDA countries 11.6 9.1Infant mortality (per 1000) PRSC -19.0 -13.3 All IDA countries -14.5 -9.6Access to safe water PRSC 20.2 7.3 All IDA countries 12.6 4.8

…and progress was faster than before the PRSC period …and faster than all IDA countries in the PRSC period

23

Poverty rates declined in PRSC countries although attribution is

difficultIncome poverty rates fell faster in

PRSC countries, in the PRSC period, but also fell faster prior to the PRSC

In non-income measures of poverty PRSC countries did better, and improvement in the PRSC period was faster

Yet most PRSC programs do not trace links between actions and poverty outcomes

Parallel sector projects increase the difficulty of attribution

24

Evaluation Recommendations

1. Underpin PRSCs/DPLs with comprehensive pro-poor growth diagnostics

2. Strengthen results frameworks, link with underlying PRS; increase poverty focus

3. Focus sector content on high-level or crosscutting issues

4. Further simplify the language of conditionality and eliminate the term ‘triggers’

5. Synchronize Bank’s internal processing with country and donor processes to enable greater ‘voice’ for Bank in multi-donor budget framework

6. Phase out PRSC “brand name” or clarify when it is to be used25

IEG INDEPENDENT EVALUATION GROUP

26

Thank You!www.worldbank.org/

ieg/prsc